Occasionally there is something blogged that compresses exactly what I'd like to say in such a simple way that I just can't improve it. Barry Ritholtz (The Big Picture) is such a writer most days, and I highly recommend a daily stop there.
Check out his post today (and his linked article about black swan events is a must-read as well).
http://www.ritholtz.com/blog/2011/09/what-should-investors-do-now/
People almost always need to do "something", however. If you can't just sit on your hands, I'd suggest reviewing your allocations, now that stocks have taken a pounding.
-Is it time to rebalance so that you buy into stocks again now, when they are "on sale"?
-Have you contributed fully to your IRA for the year? Get it in now and buy low.
Yes, the markets could certainly sink somewhat lower. Is it the end of the world yet? Probably not! While I think we could see a recession again in the next quarter, the stock market has been diverging from the economy quite a bit in the last three years - Sept/Oct, when going down, is historically a pretty good time to be buying stocks.
Regards,
Trond
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